Income Tax Bill 2025: Key Takeaways on Tax Reforms!

Finance Minister Nirmala Sitharaman pegged a new income tax bill on February 13, 2025, to simplify tax compliance rules. The bill replaces the old Income Tax Act of 1961 with all new tax reforms. The New IT bill presents a more structured Tax administration with crisp chapters, new terminologies, streamlined compliance processes, and refined compliance mechanisms for the modern era. 

Disclosure: The modifications made under the new IT bill will be considered valid only after it is passed in both parliament houses (Rajya Sabha and Lok Sabha) and accepted by the president. 

Let’s scroll down to see more detail. 

What is the Income Tax Bill 2025?

The income tax bill 2025 consolidates the set of rules and regulations that the IT department leverages to administer, collect, and recover taxes. It encompasses 536 sections, 23 chapters, and 16 schedules catering to all of India’s taxation norms. 

The income tax bill 2025 India was presented in the parliament on February 13, 2025. Once passed, the bill will be effective from April 1, 2026. 

Chapters: Breaking Down the Tax Code! 

The income tax bill 2025 has 23 chapters in total. Check out the list below. 

Why FM Pegged Income Tax Bill 2025? 

Here’s why honourable Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 India. 

1. Making Tax Provisions Easier to Understand 

New tax reforms in 2025 plan to introduce a simpler tax code, lessening the complexities of the IT Act, 1961. This will make the tax rules and regulations easier to understand for taxpayers, businesses, and authorities. 

2. Minimized Tax Rates and Amplified Rebate

Income Tax Bill 2025, presents reduced income tax rates to encourage amplified good and service demand. This results in the increased money with taxpayers helping them to save more. 

3. Removing Uncertainties to Reduce Disputes 

Reducing the chapters and structuring the content, ensures easier compliance for taxpayers. This will indirectly reduce tax evasion and increase tax filings. 

4. Simplified Compliance

Reducing the chapters and structuring the content, ensures easier compliance for taxpayers. This will indirectly reduce tax evasions and increase tax filings. 

What’s New in the IT Bill 2025?

The IT Bill cuts the existing Act short and introduces new terminologies and concepts. It maintains consistency with the 1961 Act, ensuring there are no major changes in the provision. 

1. Shorter and Simpler 

• The new IT bill is 622 pages long, which is 24% less than the 823-pages existing Income Tax Act. 

• It has 546 sections much less than the 819 sections in the Act. Initially, the Act mentioned only 298 sections and new sections were later added to act. 

• The income tax bill 2025 India, focuses on simple language and less content. 

2. Concept of Tax Year 

• Section 54E of the Act explains exemptions for capital gains on transferring capital assets. 
• Here, deductions are streamlined while the exemptions are removed. 

3. Virtual Space and Assets

• The income tax authorities should leverage “virtual digital space” i.e. email servers, social accounts, bank accounts, cloud servers, and online investments during surveys and searches. 
• Virtual assets like cryptos have been counted as property under income tax bill 2025 along with existing assets like shares, Jewellery, archeological collections, artworks, and securities. 

4. Capital Gains Exemption 

• Section 54E of the act explains exemptions for capital gains on transferring the capital assets. 
• Here, deductions are streamlined while the exemptions are removed. 

Also, You can easily calculate your capital gains using our Capital Gains Calculator.

Income Tax Bill 2025- Features! 

• Income tax is a type of Direct Tax levied on the taxpayer and cannot be transferred to another individual. 
• It is controlled by the Central Government of India. 
• It is levied on taxpayers income earned in a tax year. 
• Tax computations are done on an assesse’s income tax slab. 
• The progressive IT rate in the new tax reforms ensure rich and economically powerful taxpayers levied with more rates. 

Wrap Up! 

Hopefully, you have understood the Income Tax bill 2025, its objectives, and modifications. If you have any other query, shoot it in the comment section below. We will surely answer them. For more updates and informative blogs, stay tuned with us. 

File your taxes efficiently with Munim right away! 

FAQs 

1. Is the Income Tax Bill 2025 Passed? 

The FM Nirmala Sitharam pegged the income tax bill on February 13, and it will be effective from April 1, 2026. However, it must be passed in both parliament houses and accepted by the president. Currently, it is just presented and not passed. 

2. What is the new tax rule? 

Income tax up to Rs.12LPA qualifies for zero tax rate due to rebate. 

3. What is the new bill in parliament? 

FM presented the new income tax bill 2025 India, in the Lok Sabha to simplify the IT act, 1961 with a more structured format. 

4. Which Tax Year are we in India? 

The new bill aims to replace the current IT Act and will be effective from April 1, 2026. So, the tax year will be FY 2026-27.